Chinese women start to spend on beauty products earlier and earlier, spend more and more, and are increasingly sophisticated and demanding in their skincare routines, according to a new OC&C survey
Earlier this year, global consulting firm OC&C Strategy Consultants launched a report entitled: “Unmasking the Secrets of Chinese Beauty” after an in-depth survey covering 2,800 female skincare consumers in 20 Tier 1-3 cities across China, complemented by several consumer focus group discussions and interviews. The survey aims to offer brands a peek into China’s skincare consumption trends and offer winning tips to thrive in the world’s largest skincare market. Despite being one of the fastest-growing regions among major skincare markets, China’s skincare spending per capita is still very low compared to other major markets, with ample room for growth.
Premiumization is a major trend, with 58% of survey respondents saying that they traded up to more expensive product lines within the same brands last year, while 36% of respondents upgraded to more premium brands. Thirty-nine percent of total respondents claimed that better ingredients and improved functionality were the key reasons for their decision to switch to more premium lines or brands in the last year.
“China’s skincare market will continue to grow at a steady pace, fueled by the rising middle class and its increasing disposable income and sophistication. As such, this market will remain a magnet for the most ambitious International brands for years to come,” said Pascal Martin, Partner, OC&C Strategy Consultants.
The survey found that Chinese women are adding more steps to their daily beauty routine. To the basic use of a facial cleanser and a moisturizing cream, they have added the application of a toner, an eye cream and a serum. Around 70- 80% of the respondents also use makeup remover, mask and sun protection cream on a daily basis, which leads to an average of 6-7 steps in their daily skincare routines (Figure 1). Some of the respondents were following up to 9 steps in their daily skincare routine, especially the more “mature” women above 30 years old.
“China has a long historical tradition of deriving beauty treatments from natural herbs and oils, rice water and powdered pearls. As Chinese women have gradually shifted to modern cosmetics, they have maintained a high degree of sophistication in their skincare consumption habits. Also, as their needs rapidly evolve, they are increasingly demanding, always curious about the latest trends and technologies, and eager to trade-up to better products and brands,” added Martin.
Research maniacs – being a smart and informed consumer
According to the survey, more than 90% of surveyed respondents conduct extensive research before they buy skincare products and online plays a critical role in this research (Figure 2). Third party E-commerce websites like T-mall and JD are the number one channel for browsing across brands and offerings (41%), while social media (36%) also plays a critical role in building brand awareness and helping consumers develop product and brand knowledge.
Importance of having a star product and full sets around the stars
Twenty-two percent of respondents have dropped out of a brand in the past year to try a different brand (71%). Consumers also displayed a growing appetite for product sets. Roughly 75% of the respondents showed a growing tendency to choose skincare sets from specific brands rather than mixing and matching multiple brands, because product sets usually offer favorable discounts on price and come bundled with a gift at purchase (40%). A similar level of respondents thought using sets would bring out the best results.
“Building loyalty is not an easy game. China’s skincare consumers are always curious and tempted to try out new products and concepts that are trendy in the market,” commented Veronica Wang, Associate Partner at OC&C Strategy Consultants. “However, the first product that consumers discover in a brand, often the most famous one under that brand, can become an anchor for their trust in that brand, which will give them comfort to try other products under the same brand. This star product is key to converting and retaining customers. It is therefore critical for brands to build strong star products, as it helps drive both customer acquisition and loyalty, and create longer term loyalty”.
The earlier the better
The survey also found that Chinese women start using skincare products from increasingly younger ages. A quarter of Generation Z (born after 1995) survey respondents started using skincare products as early as 18 years old, and 90% of them before they were 20 years old. Meanwhile, roughly 80% of Millennials (born in the 1980s) started to purchase their own skincare products before they were 20 years old; while this percentage was only 70-75% for those born in the 1970s (Figure 3).
“Our survey also showed that Chinese women form their knowledge of skincare treatment through experimentation and brand-switching mostly before they reach the age of 25, and then settle into a more stable consumption pattern of their preferred brand set around the age of 30,” explained Wang. “This means that brands have to make sure they educate Generation Z and catch Millennials at an early stage of their skincare discovery journey.”
Leveraging KOL to influence and inspire
It is worth noticing that the majority of survey respondents said that they are positively influenced by KOLs, with Generation Z customers being the most receptive and responsive group. KOLs were mentioned as part of the top three preferred marketing approaches by survey respondents in every age group. Among KOLs, celebrities have been the most effective.
“The majority of Chinese younger generation consumers have their own favorite idols. The fan economy has transformed the way brands interact with consumers,” said Wang. “Cosmetic brands, among other categories like fashion and apparel, have been collaborating closely with top idols to leverage their influence toward younger generations. For example, one of the leading local cosmetic brands, Chando, started a collaboration in 2016 with TF Boys, a teenage Chinese pop band – it is not uncommon for cosmetic brands to work with male artists, targeting their strong female fan base. Chando’s product line endorsed by TF Boys doubled their sales during the tracked period in 2017 vs. 2016.”
Chinese beauty bloggers are the second most influential group of KOLs for skincare products. “Consumers tend to keep themselves updated on content posted by these professional bloggers, and are more likely to purchase after repeated exposure from them. For example, 50 famous beauty bloggers were invited to do a 20-minute livestream video for the recent launch of a new L’Oréal Paris lipstick, resulting in 10,000 units sold in two hours only on its T-mall online store. However, marketing collaboration with these KOLs, while effective, can be very costly – Papi Jiang, a phenomenal internet celebrity, sold her first video ad for an astonishing 22 million RMB last year,” explained Wang.
Balance between Experience and Convenience – omni-channel is the way to go
Forty-three percent of respondents indicate they shop online because of the wider brand selections online or the convenience (37%). However, offline channels are still very important. Forty-one percent of respondents chose offline for “guaranteed product authenticity”, which is the top reason, followed by “Opportunities to try product before buying” (39%), “More personal interaction / advice” (37%) and “More complete / detailed product information” (29%).
Not a surprise, around 60% of respondents now shop both online and offline for skincare products, as opposed to shopping in one channel only. The online channel is no longer limited to low-value or cheap products, as consumers expressed willingness to purchase premium skincare products online. Fifty-six percent of our survey respondents disagree with the statement “I tend to buy premium brands offline and mainstream online”.
“Cross-channel shopping has become the dominant behavior for skincare consumers in China, and building a seamless omni-channel shopping experience is therefore essential for a successful retail strategy,” said Martin. “Premium brands which had been very cautious about online distribution are finally catching up; for example LVMH Group’s Guerlain has recently set up a store on T-mall.”
“China is probably the most competitive battleground in the world, with powerful players from Europe, the US, Japan and Korea deployed with full strength, joined by Chinese players that have become serious challengers as well and dramatically increased their share of the market in recent years. To capture China’s outstanding market opportunity, brands have to adopt very customer-centric strategies by keeping product offerings relevant, engaging with millennials and post-millennials through KOLs and balancing physical and digital retailing for a perfect mix of experience and convenience,” concluded Martin.